In Couvillion Group, LLC v. Plaquemines Parish Government, 2019 WL 6769614 (La. App. Dec. 11, 2019), Plaquemines Parish Government (“PPG”) contracted with Couvillion Group, LLC (“Couvillion”) to be the general contractor for the Project. PPG contracted with Professional Engineering Consultants Corporation (“PEC”) to provide engineering services for the project.
During construction, PPG instructed Couvillion to temporarily cease work. Several months later, PPG directed Couvillion to resume the work as originally planned.
Couvillion asserted claims for delay damages and PPG request the engineer, PEC, to review the claim and make recommendations. PEC recommended PPG pay Couvillion $1,045,210.01 in delay damages. PPG disputed the recommendation and refused to pay Couvillion any amount.
Couvillion sued PPG, who then filed a third party complaint against PEC for contractual indemnity based on PEC’s negligence in making the recommendation. PEC filed a Motion to Dismiss the third party complaint, which was granted by the trial court. PPG appealed.
On appeal, the Appellate Court reversed and remanded, holding that PPG properly stated a claim for contractual indemnity. The Court considered the indemnity provision in the agreement between PPG and PEC, which provided that PEC would indemnify and hold harmless PPG for “loss of life or injury or damages to person or property, growing out of, resulting from, or by reason of any negligent acts, errors, and/or omissions, by the engineer.”
PEC argued PPG’s claim was solely reimbursement of economic loss and that such claims are not covered by the indemnity provision because it is not a “loss of life or injury or damages to person or property.” PEC cited Fairbanks N. Star Borough v. Roen Design Associates, where the Supreme Court of Alaska considered whether “property” in an indemnify provision encompassed economic loss, holding that the language “injuries or damages to property” denoted physical damage to tangible property. 727 P.2d 758 (Alaska 1986).
The Appellate Court disagreed, determining the word “property” in the indemnity agreement was arguably ambiguous. Given the ambiguity created by the use of that word, coupled with the procedural posture of the case (Motion to Dismiss), the Court found PPG at this stage of the litigation stated a valid contractual indemnity claim.
This will be an interesting case to follow. The term “property” seems to be fairly defined in the Louisiana case law. If this case ends up interpreting “property” to include economic loss, then millions of indemnity provisions in the State of Louisiana just got greatly expanded in scope and a lot of indemnitors just got saddled with a whole lot more risk and exposure.